Social Security Decision

[joeea]

"Common sense" can not apply to a topic that is unique (uncommon) to each individual circumstance AND perspective. Like 4% SWRs, its not a once size fits all answer.

While I can pull draw 100K more over my projected life time by waiting... it will also take me 17 years to reach the break even point where I would have more $ in my pocket by waiting
and it will take another 11 years after break even to get that additional 100K... since I'll probably be drooling into my diaper by then the extra 100K isn't going to make any difference to me.

I have no idea where that 17+11 years comes from.
Doesn't matter - we each get to decide if we value $100k or not.

 

[Spock]

Well, I mixed you up with Spock again, who calculated coming out $100K ahead with expected life expectancy by waiting, but apparently doesn't care. You guys do whatever you want. For me, "making sure I get mine" is way, way, way behind longevity insurance as a factor. If I die before 70, not taking SS won't be on my mind. My only question is whether I'm paying a fair price for longevity insurance, especially with possible cutbacks in the future.

This is getting long in the tooth, but using the opensocialsecurity.com tool thats popular here advocates for the take it early scenario if you factor in the possible future cutbacks. The future cutbacks wipe out the later in life increases, so the tool recommends we (my wife and I) both start asap at 62 in that scenario using the 23% reduction in 2034 projected by the SS trustees. It will depend on how long you draw before the cut back.

 

[joeea]

I'm just suggesting that if you have enough money so you're set for life, and your assets aren't diminishing, than maximizing Social Security based on an expectation of living to a certain age is just a numbers game and has no impact on the quality of your life. Also, there is a break-even point for delaying, and it takes a while to get there.

If the premise is that the money has no impact on the quality of your life, then worrying about a break-even point seems pointless.

So just take it now and be guaranteed that you'll use it. If you wait, you may not get to use it; or may not get the benefit for delaying SS. Not everyone lives past 78 years old. In the U.S. you have a 40% chance of getting to 80.

Hmm?

The important number is the chances of a 62 year old reaching 80, since if you die before 62 you won't have collected any benefits. To be even more precise, you'd need to consider the chance of someone in your financial situation at 62.

If you check, I think you'll find your chances are more than 40%, unless you have some health issues.

I paid in. I want to make sure I get paid out. Just my .02. To each his/her own.

Yup. You get to choose to take it as soon as the rules allow. Many do the same.

But, if the premise is that you don't really care about the money ("no impact on the quality of your life"), why would you "want to make sure I get paid out"?

Edit: To illustrate, imagine I made you this offer as a friend: I am 67 years old and my health is uncertain. I will pay you $1000 per month for the rest of my life starting right now, or I will pay you $1250 per month for the rest of my life starting in four years, assuming I'm still alive. Which offer would you take? Your answer will be your guide. Do you think it would change if you knew I had a heart attack at age 55?

My social security doesn't depend on your health.

If you are saying you are in poor health and have a very short life expectancy, then clearly you should consider starting your benefits as early as possible.

On the other hand, if you have a spouse who would expect to live a normal or longer than normal lifespan, then you might want to reconsider that thought. Survivor benefits may be important to you, as they are to me.

 

[Spock]

I have no idea where that 17+11 years comes from.
Doesn't matter - we each get to decide if we value $100k or not.

I thought the personal pronouns were obvious, the 17 years to break even and 11 years to get the 100K delta are the numbers from the math in my unique situation.

 

[joeea]

I thought the personal pronouns were obvious, the 17 years to break even and 11 years to get the 100K delta are the numbers from the math in my unique situation.

You wrote: "While I can pull draw 100K more over my projected life time by waiting... it will also take me 17 years to reach the break even point where I would have more $ in my pocket by waiting and it will take another 11 years after break even to get that additional 100K... since I'll probably be drooling into my diaper by then the extra 100K isn't going to make any difference to me."

I won't pretend to understand what math led you to that.

Doesn't matter. You've made your decision. I wish you luck.

 

[Perryinva]

I never understand the “collect now so I have more to spend now rather than later” or the “break even” mind set. I really don’t and I’m not being difficult or argumentative. If you are single, for sure, there is such a small difference betwen collecting early and investing it vs taking it later that it is mostly a wash. So there are plenty of reasons to file at 62, but those two just don’t make any sense. Will you suddenly throw out all the logic you used to invest for intelligent tax considered income and delayed gratification and suddenly spend more because you “have it”?

I KNOW by delaying filing I can spend more from day one of retirement at 62, because I can spend the amount I WILL be getting at 70 (or 69 or whatever) plus what ever SWR I planned on with what remains of my egg after subtracting what I used to buy my “COLA protected, spousal inheritable annuity of which only 85% is federally taxed and none is state taxed” which is all SS really is to me. The only reason not to do it (financially) is if you actually can’t easily afford to delay and live with the same net income. From an apples to apples comparison, if one has a $2M nest egg and plans to draw 4% ($80k) from it plus a $25k SS@62, how is that better than a $1.8M egg that throws out $72k and a $45kSS@70? From 62 to 70, it is easy to figure out the math where you can even take more sooner so you don’t have a $12k/yr GROSS increase in income at 70. IIRC, when I last did it, I figured I could draw an added $5k/yr from age 62 on, and then end up with a nest egg of $1.75M for $70k plus a 45kSS. And in addition, no matter how you slice it, your taxes are lower with a higher differential SS, that exceeds the lower generated income, so the net is even higher.

If I die at age 69 before collecting a dime of SS, I’ll be dead and won’t care, but my spouse will now have that higher income, so the plan continues. In addition, the spouse is now single, at a higher tax bracket, so the tax advantages of SS income are greater. But in the meantime, I would have lived on $5k/yr more income from age 62 to 69 than if I had collected at 62 using the exact same metrics. Insisting on “getting it now because I paid in is entirely an emotional response and not tied to the math at all. I’ve run OSS as well and the same numbers work as long as the ROI on your investments is reasonably conservative. If you are using 10%/yr as a return, then taking SS early always is the best choice.

The Reality is that the differences in the majority of cases is insignificant. However, if you truly believe that SS will be cut that amount (I don’t) and believe you can always beat the market returns on average (I don’t), then early is the smarter move. I only know that it is virtually impossible to lose SS income and there are too many ways to lose a nest egg. If I live to 85 or 90, (family mostly has and beyond) I doubt I will be interested in worrying about my income from investments if my SS income has escalated that much. (I also have pensions, so that plays some in to it) . If I could triple my SS by paying the same amount per $1000 increase I get by delaying I probably would. It’s just a great annuity.

 

[braumeister]

I never understand the “collect now so I have more to spend now rather than later” or the “break even” mind set.

It's not a matter of understanding it, but rather what mindset you have when you look at the options. That's why there have been 83,492 posts here on the subject (I think that's the actual count to date), 4,782 websites dedicated to helping you make up your mind, 923 books published each year on the topic, 458 million Google hits, and 285,412 financial advisors who want to help you decide.

Bottom line: it's a tricky decision the way it's structured, and everyone's personal financial situation is different. As they say over on the Tesla thread, "YMMV".

Just kidding, but one of the first things I figured out after joining here was that I'd go nuts if I tried to come up with the optimal rationale for everyone's questions about this. So I don't try. I took the easy way out and decided that 70 was good.

 

[CardsFan]

What bothers me most about these SS threads is the sanctimonious bellowing by some that THEY are right, and if you don't do what THEY say, you are obviously and idiot.

For us, FRA, or 65, or sometime next year?

"It just doesn't matter". Meatballs (1979)

 

[Starsky]

If the premise is that the money has no impact on the quality of your life, then worrying about a break-even point seems pointless.

I totally agree.

Hmm?

The important number is the chances of a 62 year old reaching 80, since if you die before 62 you won't have collected any benefits. To be even more precise, you'd need to consider the chance of someone in your financial situation at 62.

If you check, I think you'll find your chances are more than 40%, unless you have some health issues.

I agree with your statement. I know this may be a confusing argument. What I was trying to say is that 78 is roughly the minimum age you would need to get to, to break even by delaying SS at 66. You have a 40% chance of getting there. (and yes, I do have health issues)

But, if the premise is that you don't really care about the money ("no impact on the quality of your life"), why would you "want to make sure I get paid out"?

I'm not losing sleep over it, but it's only fair since I paid into it for 35 years - I could have really used that money back then - and it will pay for my new car and more. Why not get a free car out of it? [just a joke, people] Frankly, everyone always told me not to expect SS to be there at all when I retired. So I didn't. (BTW - "Getting Paid" is how I am able to FIRE. I don't expect to let go of that habit easily in retirement.)

My social security doesn't depend on your health.

If you are saying you are in poor health and have a very short life expectancy, then clearly you should consider starting your benefits as early as possible.

On the other hand, if you have a spouse who would expect to live a normal or longer than normal lifespan, then you might want to reconsider that thought. Survivor benefits may be important to you, as they are to me.

You are correct. But your Social Security does depend on your health; and - trust me on this - you really don't know how long your good health will last. If you're concerned about survivor benefits, then you should ignore everything I've said and follow your own path. I'm just talking about my situation.

 

[Perryinva]

I’ve never been an advocate of filing late or early. I fully understand the valid reasons for any decision, like health, needed income, single vs married, long vs shorter expected lifespan, too much reduction of savings to delay, desire to leave more to heirs, etc. . Even the emotional reasons are valid. My wife wanted hers starting at 62. Period. She wanted her “own” extra income to feel like she was contributing to expenses as she saw fit. I had zero issues with that. Whether she started with $1200/mo @ 62 or $1550@66 made really no difference to our budget at all and it made her feel better so it is worth it. By age 74 she will have recouped all she and her employers had contributed. Break even isn’t even a discussion. The only ones that “bother” me are the two mentioned, “break even” and “more to spend now”. I just keep reading about people trying to make a financial case for both at age 62 based on those two and it never makes any sense to me. Nonjudgmental, just don’t get the logic behind those reasons.

And don’t need a reply to this. Just my explanation for my post.